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US and Iraqi soldiers have recently been engaged in a series of offensives in and around Baghdad to try to stem car bomb attacks, which are mainly blamed on the Sunni Islamist organisation al Qaeda in Iraq.

The latest attack took place as senior US and Iranian officials prepared for a second round of talks in Baghdad on Iraq's worsening security crisis.

Iranian ambassador Hassan Kazemi-Qomi and his US counterpart Ryan Crocker were expected to meet in the heavily fortified Green Zone in the Iraqi capital, Iraqi officials said.

The landmark talks between the two nations in May ended a diplomatic freeze.